Correlation Between Toroso Investments and Strategy Shares

Can any of the company-specific risk be diversified away by investing in both Toroso Investments and Strategy Shares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Toroso Investments and Strategy Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Toroso Investments and Strategy Shares, you can compare the effects of market volatilities on Toroso Investments and Strategy Shares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Toroso Investments with a short position of Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toroso Investments and Strategy Shares.

Diversification Opportunities for Toroso Investments and Strategy Shares

0.04

Correlation Coefficient

Toroso Investments  Strategy Shares

Significant diversification

The 3 months correlation between Toroso and Strategy is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Toroso Investments and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares and Toroso Investments is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Toroso Investments are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of Toroso Investments i.e., Toroso Investments and Strategy Shares go up and down completely randomly.

Pair Corralation between Toroso Investments and Strategy Shares

Given the investment horizon of 90 days Toroso Investments is expected to generate 0.27 times more return on investment than Strategy Shares. However, Toroso Investments is 3.74 times less risky than Strategy Shares. It trades about -0.04 of its potential returns per unit of risk. Strategy Shares is currently generating about -0.07 per unit of risk. If you would invest  1,595  in Toroso Investments on January 24, 2024 and sell it today you would lose (362.00) from holding Toroso Investments or give up 22.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.87%
Values	Daily Returns

Toroso Investments  vs.  Strategy Shares

Toroso Investments

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Toroso Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively abnormal technical and fundamental indicators, Toroso Investments may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Strategy Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategy Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Toroso Investments and Strategy Shares

The main advantage of trading using opposite Toroso Investments and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toroso Investments position performs unexpectedly, Strategy Shares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Strategy Shares will offset losses from the drop in Strategy Shares' long position.

The idea behind Toroso Investments and Strategy Shares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.